Achievements

For any developing or emerging economy serious about reducing poverty and spreading opportunity, there are few alternatives to turn to for help. Foreign assistance and humanitarian aid have not done the job; business and property reforms that they have already tried, no matter how well-intentioned, have not worked. Informality, exclusion, and poverty persist –even in developing countries with impressive economic growth and in those lucky enough to be rich in oil; so does poor governance and corruption. The ILD offers a unique alternative –intellectually sound as well as practical, recognized around the world as a breakthrough in the search for the Holy Grail of sustainable development.

Little wonder that leaders and policymakers around the developing world have decided to try to replicate the ILD Program and institutional reform efforts on their own. We have recently done some research on business and property reform initiatives in several countries, and found considerable evidence that these efforts have been inspired by the ILD’s work and the ideas of Hernando de Soto.

Between 2005 and 2008, Mr. de Soto co-chaired –with former U.S. Secretary of State Madeleine Albright– this initiative to mobilize the international community toward a new paradigm for development that focuses more on looking at poverty “from the perspective of the poor” and giving them the kinds of legal tools that will allow them to gain access to the market in order to improve their lives and the economies of their nations.

In the 1990’s USAID and the World Bank’s Foreign Investment Advisory Service (FIAS) developed “The Investor Roadmap”, which became a popular tool for monitoring the business environments of developing countries. A diagnostic study of the procedural and administrative barriers to creating and investing in businesses in a particular country, the concept for the Roadmap, now used in more than 50 countries, was inspired by Hernando de Soto’s first book, The Other Path.

President Luis Alberto Moreno has publicly declared that the Bank’s strategic realignment for 2007 along with his initiative “Building Opportunities for the Majority” were inspired by the ILD’s work. The new IDB President invited the ILD to do a study in 2006 of the informal sectors of 12 countries in Latin America and the Caribbean that would provide a useful database and proposals for institutional reform for the bank’s commitment to explore new alternatives for reducing poverty in the region.

In May 2005, Hernando de Soto visited China at the invitation of the leading brokerage and investment banking firm in the Asia-Pacific market, CSLA, to speak at its 10th Annual “China Forum” in Shanghai –where he was introduced as “the intellectual grandfather of China’s rural reforms”.

In 2001, Hernando de Soto met with Russian President Vladimir Putin to discuss the country’s massive informality and growing poverty, but over the next several years there was silence from the Kremlin about a formal collaboration with the ILD. Then, in 2007, Mr. de Soto was invited to speak at the Forum on National Business hosted by Delovaya Russia, an organization made up of entrepreneurs and leaders of mid-sized businesses. During this visit, Mr. de Soto was invited to the Kremlin to meet with Putin’s Deputy Chief of Staff, Igor Ivanovich Shuvalov, and other high level advisors to the President. Mr. Shuvalov mentioned that in his 2005 State of the Union address, President Putin had launched his own version of the ILD Program and then laws to title some 350,000 dachas.

When the Foreign Minister of Ghana, Nana Addo Dankwa Akufo-Addo, delivered a major speech in February 2006 to 2,000 people at the Kwame Nkrumah University for Science and Technology on the country’s “future perspective,” central to his vision –and that of the ruling New Patriotic Party (NPP)– was “indigenous capitalism”, which he defined as “the economic empowerment” of ordinary Ghanaians, most of whom, he noted, operated in the informal sector. “Indigenous capitalism encourages more and more of our citizens to become active players in the formal economy”, the Foreign Minister explained. Positioning indigenous capitalism squarely in the tradition of Ghanaian nationalism, Akufo-Addo noted that “informal sector reform” was the essential link to the nation’s on-going efforts at public sector, land, education, health delivery, and private sector support reform.

Hernando de Soto has visited South Africa several times and has discussed the nation’s growing problem of informality with President Thabo Mbeki, Nelson Mandela’s handpicked successor. Though Mbeki has yet to extend a formal invitation to the ILD to carry out its Program, the evidence over the past two years shows that his Government and his party, the African National Congress (ANC), have recommended economic reform strategies influenced by de Soto’s ideas and ILD’s policies. In 2005, for example, the ANC published a “national general discussion document” entitled “Development and Underdevelopment –Learning from Experience to Overcome the Two-Economy Divide” –i.e. the formal and informal economies.

The ILD's influence has recently spread to this fast-growing emerging economy with persistent massive poverty. In November 2007, an article appeared in India’s Business Standard that opened with what the author identified as “the famous question posed by the Peruvian economist Hernando de Soto, “Why does capitalism succeed only in capitalist nations and fail in so many others?” The article noted that one of de Soto’s answers was poor land-titling, and proceeded to describe how three states in India were reforming their property systems with funds from the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

In 2002, in an all-out effort to revitalize an economy still suffering from the 1997 financial crisis, the government of Prime Minister Thaksin Shinawatra created a massive effort “to generate grassroots and SME growth”. The Prime Minister also invited the ILD President to address state agencies and financial institutions, along with policy and public opinion makers, on asset capitalization. In January 2004, the Thaksin government’s flagship “Asset Capitalization Policy” went into effect, aimed at legitimizing informal property and business assets and registering them so that they could capture as much value as possible in capital markets.

Between 1990 and 2013, Peru's economy grew twice as fast as the rest of Latin America’s economies —with its middle class growing four times faster. Peru also won the only victory in the West over a terrorist movement since the fall of communism that did not involve the intervention of foreign troops.

For the sake of clarity, these dramatic events of how Peru converted the biggest political and economic crisis in its history into a success story is described in two separate info-graphics: